3 Money Tips That Don’t Help Low-Income Earners

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“Can you look at my finances and tell me what I can do to get ahead?”

Even though I’m not a financial professional, my friend wanted my insight. She can’t afford a financial planner, and she figured it might help to have an outside view of what’s going on with her money.

She turned to me because I write about money on the internet, and she thought I had some knowledge that might help her — despite the fact that almost everything written online about managing money is practically useless for many low-income earners.

The reality of the situation is that almost all the financial advice offered online is aimed at the middle class. Here are some of the “basic” tips that many of us take for granted, but that are basically useless for someone who isn’t earning a living wage.

3 financial tips that may not work for low-income earners

1. ‘Cut out the unnecessary spending’

Once upon a time, 17 years ago, I was pregnant and my then-husband and I were struggling to make ends meet. Both of us were in school. About once a month we splurged and spent $10 on Wendy’s. A couple years later, we were still poor and in grad school. I carried a calculator with me to the grocery store to tally up what we bought; if we had room, we could buy a $3 loaf of focaccia bread as a special treat.

Let’s be honest. That $10 a month at Wendy’s wasn’t breaking our budget. And for many people who work 40 hours a week — or more — at minimum wage jobs, spending a few bucks here and there on a fast food meal isn’t the reason that they don’t have any money at the end of the month.

My friend is in that boat right now. If she’s lucky, by the time she pays rent on her modest two-bedroom apartment (her son lives with her), she has enough money left over to pay for gas to get to and from work, groceries, and insurance. She manages to avoid getting into debt, but just barely.

While looking through my friend’s spending, I was hard-pressed to find any place to cut — she was literally already cut down to the bone. Just about everything she spent money on was a necessity. Telling low-income people to just cut out one latte a day or skip dining out twice a week isn’t practical; they aren’t spending money on these things anyway.

2. ‘Create a monthly budget so you have a plan for your money’

Sure, you can track your spending when you’re poor, but it’s frustrating. The idea is that tracking your spending will help you create a budget. And when you have a budget, you can get your spending under control and plan for the future. Unfortunately, creating a budget often feels futile to those with low incomes.

And tracking your spending to build that budget?

Well, I knew where every penny was going back in my own scarcity days. I didn’t have a budget, but I was painfully aware of the fact that I paid $435 for rent on our one-bedroom apartment and that I could spend $35 on groceries for the week. (This awareness is also why our groceries were skewed to low-cost items like ramen and canned vegetables.)

The book “Hand to Mouth: Living in Bootstrap America” by Linda Tirado makes the point that middle class financial goals focus on long-term results. You create a budget today, presumably so you can meet other, more ambitious financial goals later.

However, when you’re living hand to mouth, you’re instead adapting to short-term circumstances, Tirado points out. Budgeting isn’t truly designed for short-term goals. You might not even know what the month holds in store for you.

My friend uses her last paycheck of the month to pay the following month’s rent. There’s just enough left over to buy groceries. The bulk of another paycheck in the month goes toward paying bills — some of which might be late or almost-late. You can see how this situation of being behind, or almost behind, creates a pattern that’s practically impossible to get out of, especially if you aren’t making a living wage.

My friend is fortunate enough to manage to stay out of debt, but she’s not sure if that would still be the case if she had an unexpected expense. Like 40 percent of Americans, if she faced a $400 emergency, she would probably have to turn to debt in order to cover it.

3. ‘Start a savings account’

Telling someone who’s lucky to have $10 to spend on Wendy’s at the end of the month to start a savings account is pretty useless. Sure, back then I could have put that $10 into savings. But then I would have had nothing to look forward to. That $10 — and some months it was actually $2 for a couple of Frostys — was what we had for “fun” money.

Today, the pressure of debt exacts a heavy psychological toll on many Americans. Many low-income Americans only have a few bucks each week to spend on something that helps them cope with the realities of their lives. There are nearly 40 million people living in poverty, and we act like the reason they can’t get ahead is because they spend $5 on a value meal as they head home from working a double shift on a Saturday night.

Shaming someone working a full-time job and just getting by for making the “bad decision” of spending $5 on a value meal at the end of the week, instead of putting it in a savings account, doesn’t address the underlying problem.

For many low-income workers, starting a savings account just doesn’t make sense. First of all, they might not even qualify for a savings account. And once you get past that hurdle, it seems pointless to be saving $40 per month and still having just as bleak an outlook. Even investing that money — something that’s way out of reach for many low-income Americans — won’t provide enough to retire on.

Is making more money a viable solution? Maybe not

In the end, I had to give my friend the bad news: “I’m sorry. You just need to make more money.”

She doesn’t have a second job, so she could conceivably start a part-time gig and boost her monthly income. Her main job doesn’t pay a living wage, and she’s barely scraping by. Idaho, where we live, has one of the highest percentages of workers earning minimum wage employment in the nation. However, even though the cost of living is relatively low, it’s not low enough for many workers. In fact, 46 percent of the people in Idaho Falls, the city where I live, find themselves in or near poverty.

And this is the case in many other places around the country. In order to get ahead, many workers have to make more money. But it’s not as simple as it sounds.

My friend would have to take time away from her son if she took on another job. Can we honestly say that she doesn’t deserve a little down time with her family, just because she doesn’t have a living wage job? Additionally, her health isn’t great right now and she doesn’t have the money for doctor visits — no employer-sponsored insurance. Working another job would likely break her body down further. Can she afford more health issues?

Trying to make an additional part-time job work under these circumstances doesn’t always make sense, even if you could make more money doing it. Working 50 or 60 hours a week, just to potentially have enough to start an emergency fund, might not seem worth it to someone, especially if that extra work doesn’t come with health benefits, a retirement plan, or anything else we like to associate with “good” jobs.

My friend has a college degree (she paid off the student loans a few years ago), but it hasn’t yielded the promised decent-paying job. She could get more education, but where would she find the time to go back to school? Between one full-time job and caring for her son, that doesn’t leave much time for educational pursuits. And there’s no guarantee that this next debt-purchased degree would result in a pay increase.

Systemic issues weigh down low-income earners

No one likes to be a Debbie Downer, but there are some true systemic issues that weigh low-income earners down. And it’s not just about student loan debt weighing down millennials and keeping them from achieving financial and life milestones — although that’s definitely an issue.

Sometimes, you just don’t have the support systems in place. For example, Idaho just passed a law that expands Medicaid coverage to a portion of its population. However, this law also includes work reporting requirements. Most of those who qualify under this new eligibility already work, but now they have to go through a burdensome process of reporting.

The exact rules haven’t been worked out, but for those without internet access, or a work schedule that allows them to fill out the paperwork and turn it into an office, the reporting requirements result in additional burdens to an already-burdened segment of the workforce. Similar rules in Arkansas and Kentucky were recently struck down in the courts because the barriers resulted in lost healthcare coverage.

Access to education, safety net programs and other resources requires time or money — and sometimes both. Our system of work, especially for those making minimum wage, isn’t designed to promote an abundance of time or money.

Even driving for a rideshare company, that ubiquitous side gig of the middle class, might be out of reach for low-wage earners. Lyft requires a four-door car and, in Idaho Falls, that car must be 2005 or newer. My friend’s 2002 two-door beater wouldn’t make the cut — and her credit file is too thin to qualify for her for a reasonable rate on an auto loan, assuming she could make the payments anyway.

Bottom line

When it feels like you’re going nowhere, and you’re already living on the edge, the hard reality is that you don’t need judgment for that $1 frosty — and you certainly don’t need another article about how to trim the fat from your monthly budget so you can start saving for the future.

There are ways to get out of the paycheck to paycheck life, but the path out usually requires a support system, extra time to make more money and the health to manage it all.

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Miranda Marquit
Miranda Marquit |

Miranda Marquit is a writer at MagnifyMoney. You can email Miranda here

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